Business Law - Chapter 38: "Limited Liability Companies and Special Business Interests

Limited liability company

a hybrid that combines the limited liability aspects of a corporation and the tax advantages of a partnership

What are members?

the shareholders or owners of an LLC

What is personal liability?

when the liability is limited to the amount of investments

Are LLCs legal entities?

Yes

What are articles of organization

The document that is filed with the appropriate state official when a limited liability company is formed

What are pre-incorporation contracts?

When people are entering into a contract during the process of incorporation

Under the federal jurisdiction statute, a corporation is deemed a citizen where?

in the state where it was incorporated

Who is liable in a LLC?

the entity itself instead of its members

How does the taxation of a LLC work?

It can be taxed as either a corporation or partnership. Most likely a partnership to avoid double taxation

How are LLC with only one members taxed as?

as a sole proprietorship

How are LLCs operated in other states?

They don't receive consistent treatment in other states

What is member managed?

all the members participate in management and decisions are made by majority vote

What is manager managed?

the members designate a group of persons to manage the firm

Managers in a LLC owe what?

a fiduciary duties

What are fiduciary duties?

the duty of loyalty and the duty of care

What is operating agreement

An agreement in which the members of a LLC set forth the details of how the business will be managed and operated

What does operating agreement include?

Management, profit divisions, memberships interest, dissociations, meetings, voting rights

what is dissociation

when a partner ceases to be associated with the carrying on of a business

What are the events that trigger a member's dissociation from an LLC

voluntary withdrawal, expulsion, court order, incompetence, bankruptcy, and death

What happens when a member dissociates from an LLC?

they lose the right to participate in management

Does a dissociated member have the right to force the LLC to dissolve?

No

What is a joint venture

when two or more persons or entities combine their efforts or their property for a single transaction

How is a joint venture taxed

like a partnership

How are joint ventures different from partnerships?

joint ventures are usually created for a single project

What is a syndicate

investment group where several firms join together to finance a particular project

What is a joint stock company

a true hybrid of a partnership and corporation

what characteristics for a joint stock company?

ownership represented by a transferable share of stock, managed by directors, can have a perpetual existence

What is a business trust

a form of business organization created by a written trust agreement.

What is a cooperative

an association that is organized to provide an economic service to its members

How are incorporated co-op distributing their dividends

on the basis of the amount of capital they contributed